Understanding the Cash Cycle

Profit is the key to the long-term sustainability of your business. In the short term, you need cash. By understanding your cash cycle, you can manage your cash better and anticipate the amount and duration of your need for financing. In this workshop, we'll use visual modeling techniques to demonstrate how elements of your business are connected in an intuitive, but a quantitatively rigorous, way.

0 out of 6 steps completed0%

6 Lessons

The cash cycle – quite simply – is the delay between the time you pay your bills and the time you collect payments from your customers. It’s determined by the interplay among accounts payable, inventory, and accounts receivable:

The Components of the Cash Cycle

The shorter your cash cycle, the less cash you’ll need to support the growth of your business. Short cash cycles are, in a sense, more efficient.

In this workshop, we’ll use a visual model to explore the drivers of the cash cycle and different rates and kinds of growth.

You’ll learn how to use such models to weigh the complex tradeoffs inherent in different marketing channel strategies, profit margins, and growth rates. You’ll also see how they can be used to get a better idea of how much external financing your business might need – and for how long you’ll need it.

Your Guide

Dave is a “business midwife” who gets energy from helping people innovate in and through their human scale businesses. As a former private equity investor and lender, he helped make more than $500 million in capital commitments to finance growth, acquisitions, and recapitalizations. As part of entrepreneurial teams, Dave has helped raise more than $30 million of equity capital. He's also worked in product development, innovation management, manufacturing, and administrative roles.